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The head of a major aggregator has predicted that Westpac isn’t done with its rate hikes and more lenders will follow suit.

These comments from the chief executive of Finsure, John Kolenda, have come after Westpac announced it was increasing the variable interest rates on residential owner-occupied and investment loans by 20 basis points, in response to additional capital raising requirements set by APRA.

“The banks are going to be looking at increasing their rates for owner-occupiers and investors outside of cycle because of the additional provisioning of having to meet the APRA guidelines by June next year,” Kolenda told Australian Broker.

“It is not surprising. If you look at what I have said before, I think the banks will be moving anywhere in the order of 20-50 basis points over the next six to nine months.

“[Westpac’s decision] came out earlier than I thought, but clearly this extra compliance and provisioning is having an impact on their rate of return that they are going to have to, in order to meet shareholder returns, make some pricing adjustments to their overall portfolio.”

According to Kolenda, brokers and consumers should expect more rate hikes across the market.

“I think all the banks will increase, but in regards to timing, we will have to wait and see. Other banks might not necessarily move as quickly – don’t forget this stuff doesn’t come into effect into the second quarter of next year. However, we can expect that most lenders will [raise rates].

“But by what amount? I think the banks are really looking at what sort of impact it will have and then they are going to make those adjustments over the course of the next six to nine months. Wherever their rates are sitting currently, we are likely to see an extra 20 to 50 basis points. It might not even be over for Westpac either. As lenders really dive into the impact onto their bottom line, then they are going to make those adjustments accordingly,” Kolenda told Australian Broker.

COMMENTS

by Regional Broker15/10/2015 11:27:52 AM

Interesting comments, really strange market, Suncorp who are the 6th largest dropping rates as the same day as Westpac raise rates?

All this will do is drive the broker market away from the big four if they all raise rates.

by John Online15/10/2015 12:18:41 PM

For the life of me I don't understand why these banks don't just bloody wait until the RBA cut rates & don't pass it on.What's the point, Westpac increase rate by 0.20% then RBA cut in November, this is going to cause so much confusion among borrowers and brokers.